Redefining the “Ideal” Retirement

What is the ideal retirement? It's different for everyone, of course. But with insufficient nest eggs and failing pensions it almost certainly will include some kind of employment. Here's how the Great Recession helped redefine retirement yet again.

The retirement ideal has undergone more facelifts than an aging baby boomer. Not so long ago, your grandfather worked to 65, collected a gold watch, and split for Florida with a fat pension and health benefits. Millions of people followed the same path.

Yet that model has been decaying for years, driven by the new realities of human longevity, the deep-seated desire of millions of retiring boomers to make a difference, and, more recently, financial pressures that surfaced during and after the Great Recession. Emerging now is a highly personalized vision of later life—a vision dictated by your passions, health, desire to remain engaged, and of course the ability to pay for it all.

In this more customized retirement ideal, one thing is certain: Boomers (who are reaching age 65 at the pace of 10,000 a day) do not want to withdraw from society and lead a life filled with bingo and golf. That may have sounded inviting when you worked to 65 and died at 70. But boomers have watched their often-unprepared parents live far longer than anyone thought possible. Boomers are the first generation that could count on living to 82, 87, or maybe 120.

The idea of idling away 30 years is anathema to a generation that fought for civil rights and gender equality. Even before the recession, this group was redefining the retirement years as a time for staying at work longer, finding purpose and remaining engaged. “Baby boomers view retirement as their next chapter,” says Joyce E. Morningstar, a financial planner with Dynamic Wealth Advisers in Scottsdale, Ariz. “Retirement is no longer an event. It’s a transition.”

For the financially prepared, this is an exciting time with many options. Sometimes the ideal retirement involves working full time—but at something completely different. It might mean volunteering, teaching, mentoring, consulting, getting into politics, writing a novel, or going back to school—for the fun of it.

“A number of my clients are self-employed professionals who left the corporate world to do what they love, everyday,” says Morningstar. “Others are serial entrepreneurs. Most of them plan to continue working, and it’s usually not about the money. Their goals are intellectual stimulation, making a contribution, and personal satisfaction.”

This expansive and, some might say, idyllic view of the new retirement is so new that most people don’t quite know how to approach it. You see a lot of advice on where to live in retirement, how to save for retirement, and how to make your money last in retirement. But there is very little out there on how to actually make the most of these years, which could stretch for three decades. Universities and community colleges lure retirees back to the classroom to study photography, writing, or literature; what they should do is offer a course in how to figure out what an ideal retirement means to their students.

“There is no best retirement,” says Tamar Chansky, author of Freeing Yourself from Anxiety. “There’s only what’s best for you. Comparing ourselves to others started in junior high and is alive and well in retirement. So what if someone else wants to travel. Is that really what you want?”

We tend to idealize major life milestones like graduation, weddings, and having children. Retirement is no different, Chansky says, and when things don’t work out as planned you become vulnerable to disappointment and even depression. The ideal retirement, she says, is a resilient retirement where you adjust to disappointments and keep your plans flexible.

“I work with a lot of people who are experiencing depression because they aren’t living the ‘ideal retirement,’” says Amy Morin, a clinical social worker in Lincoln, Maine. “Retirees need a reason to get out of bed every day. For some people, this may mean taking care of a grandchild one afternoon a week. For others, it could mean volunteering a few hours per week while others may want to obtain a part-time job that they find to be low stress and highly enjoyable.”

The key, Morin says, is having a routine and living according to your values. So a retired person who values family should build in the freedom to spend more time with loved ones. “If that person moves to the Sunshine State—far away from relatives—it’s likely to cause depression,” she says.

The idyllic vision of retirement that had been emerging—staying active, healthy, engaged and having the resources to do what you want—suffered a major blow in the global recession. Americans lost a collective $16.4 trillion of net worth and while that damage has largely been undone through rising asset prices the past four years, the sting remains fresh and many portfolios lost a decade of growth.

The recession also took a bite out of pension funds, rocking the financial security of millions of retirees. In a report on global pension health, Mercer found that the U.S. system ranks 9th among 17 peer nations; the firm recommends raising the age for pension benefits, requiring more contributions, and putting a stop to leakage on retirement plan assets. All of these would help in the long run but amount to an even greater financial burden now.

So the new vision of retirement must account for our ability to pay. For most, that means working longer. After all, the average worker between 55 and 64 has saved only $65,000, according to the Employee Benefit Research Institute. Still, there are some common threads to the ideal retirement:

Financial freedom This is a big one, and it has been redefined. Financial freedom is no longer about having enough money in the bank to quit work for good and do whatever you like; it’s about having enough income and free time to do the things that matter most to you. It’s less about material things and more about personal experiences. You may need to work longer to achieve financial freedom. But if you step back from your grinding career and do something you love, on your terms, you may get the income and flexibility you need to travel, spend time with family, or pursue a passion like painting or writing. A key element of financial freedom is guaranteed monthly income through an annuity, traditional pension, or passive income like stock dividends, interest from bonds, or rent from investment properties.

Purpose This is what will get you out of bed in the morning. It is the theme that runs through my latest book, A New Purpose, with co-author Ken Dychtwald. Retirees often spend the first few years of freedom from work traveling, seeing grandkids, and generally enjoying an unstructured life. “Then the reality of a long retirement sets in,” says William Slade, a financial planner in San Jose, Calif. “The return to a new normalcy is where the great unknown begins.” This is when retirees start to look for a purpose, preferably one without much stress. In A New Purpose, we use the term “going from success to significance” to describe the transition from a focus on earnings to a focus on making a difference. You may choose to consult, take a part-time job, volunteer, teach, coach, join a ministry, run for office, or become involved with a nonprofit. The idea is to find a pastime with intrinsic rewards, which is especially appealing to retirees that did not get a lot of personal satisfaction out of their career.

Good Health Let’s face it: There is no ideal retirement without good health, which is why gymnasiums, tracks, and bicycle trails are crowded with folks 50-plus. The nutrition field is exploding and so are medical practices designed to keep you physically able to lead an active lifestyle. A big part of your health is mental wellness, which research shows is improved with engagement, social connections, and continued employment. “Attitudes about aging and expectations for retirement are really changing,” says Jana Headrick, wellness director for Inverness Village, a continuing care retirement community in Tulsa, Okla. “Staying active and being fit is less about adding years to one’s life and more about what it allows you to do with your retirement.”

Close Relationships Retirement is a time to build new relationships and take care of those that are most important, starting with your partner. While the divorce rate is declining overall it has doubled for folks past the age of 50. Knowing they still have 30 years to live after the kids have left, a lot of boomers are deciding they want a new mate. Common issues include too much time together with few shared interests, loss of self-image without a career, and difference over travel and time with family. These can be overcome. “Don’t wait until you actually retire to ask, ‘Who Am I and what will I do for the rest of my life?’” says marriage therapist Sharon O’Neill in Westchester County, New York. “Start early discussions with your partner and work the entire transition as a team.” Healthy social connections, including friends with shared interests, are good for your health and critical to an ideal retirement.

Giving Back This is one way to find purpose, and for many retirees is what the new model is all about. After focusing on a job and family for 40 years, it’s time to return something to the world through charitable giving, volunteerism, or work for pay at an organization devoted to social issues you find inspiring. “There’s a huge disconnect between who boomers are and what society is prepared to offer them in retirement,” says Don Tebbe, co-founder of Transition Guides. “Our thinking is still fossilized around the idea that retirement should begin at age 65. Yet retiring boomers are relatively healthy, extremely vital, and with plenty of life runway in front of them. They are at a point where they want to give back; indeed, may even feel compelled to give back.” This late-life yen to give back has been explored by philosophers from Abraham Maslow to Erik Erikson. Giving back is filled with intrinsic rewards and part of legacy that sets a positive example for those you love.

Once common and easily defined, the ideal retirement is now highly individualized and increasingly difficult to achieve because of our longevity, retirement savings shortfall, and the financial setbacks of the past six years. But if you embrace the new model and can find satisfaction with your extra years on the job, it’s still possible to retire in style.

Dan Kadlec is a journalist who has written about personal finance for TIME and other outlets for 25 years. He is the author of three books, a leading voice in the global financial literacy movement, and strategic adviser to the National Financial Educators Council.

Kadlec's latest is A New Purpose: Redefining Money, Family, Work,Retirement, and Success

All of them have pensions at 70% of their last years pay and they are all healthy enough to golf and play tennis (doubles). Since I graduated from college in 78 it seems like the pay differentional i was told existed between private and public sector has vanished - bet-no.com

Good article, Dan. When discussing working after leaving a primary career, I suggest we look at "expectations vs. reality." According the 2013 EBRI survey, 69% of workers say they want to work in retirement, but only 25% are actually doing so. So, better have a Plan B!

I think the "New Retirement" is about choices, but grounded in reality.

And, don't forget universal design and the community where you live. Having a home where you can "age in place" and a community prepared for an aging population - such as having one stop-shopping - is important, too.

Jan Cullinane,

The Single Woman's Guide to Retirement (John Wiley & Sons)

The New Retirement: The Ultimate Guide to the Rest of Your Life (Rodale)

I think this is only true for the 85% of the public employed in the private sector. At age 59 all of my peers in public safety are retired and my peers in teaching are a year away. All of them have pensions at 70% of their last years pay and they are all healthy enough to golf and play tennis (doubles). Since I graduated from college in 78 it seems like the pay differentional i was told existed between private and public sector has vanished.. I guess that was more of a post WWII thing. All of this is good advice but pales compared to having your needs met without working- and having your working neighbor on the hook for the tab.

"Boomers do not want to withdraw from society and lead a life filled with bingo and golf." Every article you read seems to imply that past generations all headed for the rocking chair once retired. I am sure that even in the past there were many who retired and continued to do part time work, volunteered. traveled and stayed active in other ways. While it may be harder financially for some these days the idea that retirement is a totally new animal seems absurd. There are other options besides continuing to work. I just checked out the site Retirement And Good Living where there are several great pages and posts about volunteering, relocation, traveling and even part time jobs. As you noted retirement is different for everyone. And everyone should explore their options and do some planning.

Indeed, one of the best retirement articles (in the top 5) that I have ever read - and I read hundreds of retirement articles a year.

I have to question this statement, however:

"But with insufficient nest eggs and failing pensions it [retirement] almost certainly will
include some kind of employment".

As a recent USA TODAY article reported:

"In 2012, only 18.2% of people 65 and older were working. While that's up
significantly from 10.8% in 1985, it's a lot lower than the number who
expected to work."

Fact is, most people over 65 who want to work will not be able to work due to health problems, inability to find a decent job for various reasons (such as age discrimination), or having to look after a spouse with health problems.

Again, an outstanding article. (In fact, I wish I could write as well as you.)

I retired from full time employment in March this year, but in 2009
we set up our online home exchange travel business (homeexchange50plus) to keep us busy
in retirement. Since retiring, I have spent part of most days
'working' on our website, developing and marketing it to increase
our member numbers. I would recommend becoming self employed in retirement but it takes
much research and do something you enjoy.

I would also like to recommend that for those who want to
travel, either before or after they retire, that they think about
Home Exchange for a vacation. Swapping homes saves money but also
provides great travel experiences. Why pay for a hotel room or rent
a villa when you can stay for free?

"Extra years on the job"? Good luck with that. Most of those jobs have been off shored. Executives and bonuses are what it's all about. If you ain't one of those prepare to be f**ked. But if you are and executive then why would you care?

Great article! We're finishing up a documentary: Broken Eggs Film, The Looming Retirement Crisis in America. This is a great article, and the film discusses these new ideas of retirement. I just posted your article on our Facebook page. Thanks for keeping the conversation going! www.brokeneggsfilm.com